California residents who have signed up for health insurance on the state’s exchange to make sure they are covered on Jan.1 could still find themselves uninsured in the new year by no fault of their own.  

As many as 35,000 of the health insurance applications faxed in to Covered California, the state’s insurance exchange, have yet to be fully entered into the system, according to Sam Smith, president of the California Association of Health Underwriters, and the clock is ticking. In order to be covered by Jan. 1, Smith says California applications need to be fully processed by Dec. 23 and premium checks need to be postmarked by Dec. 31.

FOXBusiness.com learned on Thursday that the ObamaCare exchange in the Golden State is scrambling to get faxed applications into the system and none of the applications have been submitted to insurance carriers.

“These people who think they were covered may be in for a holiday surprise,” says Smith.   

He says Covered California had been instructing brokers and agents to fax in applications from the first day the exchange opened on Oct. 1 because the website was not yet fully functional.

If insurance companies haven’t received the applications, they can’t process them and fully enroll the individuals. And with so little time left, Smith is skeptical that verification and payment for premiums can be fully completed by the deadline.  

Mismanagement Leads to Major Logjam

Smith says it is standard practice in the insurance industry for scanned applications to be uploaded into databases automatically. After it’s scanned, brokers verify the information is correct before final submission.

At Covered California, however, the paper application differs from the online application – meaning that all faxed-in applications need to be manually entered into the database. This process, which can take up to two hours per application, has created a tremendous logjam for the state exchange, which Smith says has received anywhere from 23,000 to 35,000 applications by fax.

“The person that’s looking at this application and inputting the data has to be putting the information in by hand, and the [questions] are not in the same order as the data screen so you have to go back and forth, back and forth, which causes errors and adds time,” says Smith.

“They don’t have the manpower – now they’re telling us they won’t have the manpower.”

Covered California is now asking brokers for their help—but it may be too late.

FOXBusiness.com reached out to Covered California and has not received a response.

Smith says Covered California’s plan is to upload some of the basic information for each application, save it, and then send an online request to the broker who submitted the application. At that point, the broker can accept the request and fill out the application themselves – assuming they have the two hours necessary to finish the process.

If the enrollment process isn’t fully completed and the check isn’t postmarked by Dec, 31, coverage cannot begin on Jan. 1, says Smith. He is highly skeptical that brokers will be able to shepherd this process fully by the deadline.

Smith says the whole process could have been avoided if the website’s contractor had followed industry protocol regarding the applications, or had Covered California come forward with the truth and reached out to brokers for help earlier this fall.

“It’s a management issue. We may not like it, but the truth is our friend,” says Smith.

Follow Gabrielle Karol on Twitter @GabrielleKarol